7. A. Butcher Timber Company hired your consulting firm to help them estimate the cost of equity. The yield on the firm's bonds is 8.75%, and your firm's economists believe that the cost of equity can be estimated using a risk premium of 5% over a firm's own cost of debt. What is an estimate of the firm's cost of equity from retained earnings? *

A. 12.60%

B. 13.75%

C. 13.63%

D. 14.17%

E. 14.74%